US regulators, along with the regulator, have decided to ban officials from owning a number of assets. Federal Reserve officials will be prohibited from owning stocks, bonds and other assets under the announced rules. They were first outlined last October. The new rules have also extended to cryptocurrencies. This asset class was not included in the list last October.
The measures follow news related to several senior Fed officials who traded stocks and equity funds shortly before the central bank adopted sweeping stimulus packages in the early days of the Covid spread. It refers to the head of the Dallas Fed, Robert Kaplan, and the president of the Boston Fed, Eric Rosengren, who made stock market transactions in 2020. Previously, such transactions had been allowed by the Fed's internal rules. However, information obtained in the proceedings has led observers and lawmakers to wonder about a possible conflict of interest.
As it later became known, following a media furore, Kaplan and Rosengren disclosed the deals they had made. For example, Kaplan had traded at least $18 million in individual companies' shares in 2020. This includes trades in shares of giants Apple Inc and Amazon.com Inc. Federal Reserve officials will now not be able to trade multiple assets, including stocks and bonds as well as cryptocurrencies, under new rules that are expected to come into operation on May 1.
The rules would apply to FOMC members, regional bank presidents and a host of other officials, including bond managers and Fed staff who regularly attend board meetings. The rules also apply to spouses and minor children. "The Federal Reserve expects that additional staff will become subject to all or parts of these rules after the completion of further review and analysis," a press release said. It is also noted that the new requirements aim to support public confidence in the impartiality and integrity of the Committee's work by protecting against even the appearance of any conflict of interest.
Under the new rules, officials still holding these kinds of assets will have 12 months to get out of them completely. New Fed officials will have just six months to do so. Along with stocks, bonds and cryptocurrencies, the ban applies to commodities, foreign currencies, sector index funds, derivatives, short positions and agency securities.
By the way, Congress is also debating a similar measure, which would also restrict its members from owning shares.
As for the technical picture of the S&P500
Today the bulls started active buying from the low of $4 265, which I drew attention to last week. A quick return above $4,312 for now leaves hope for a market recovery, but what will happen in the regular session today is a big question. Buyers need to actively defend the support of $4,320, which is bound to be tested today. A break of this range would increase pressure on the index and bring back the bear market with the prospect of renewing the lows already at $4,265 and $4,223. The bulls will probably also try to continue upwards today to the resistance area of $4,378. A breakdown of this area would allow for a rebound to $4,433.
